RenewableUK and Hydrogen UK have published a joint report, Splitting the Difference – Reducing the Cost of Green Hydrogen to Accelerate Deployment, outlining strategies to significantly lower the cost of green hydrogen production. The recommendations in the report, if fully implemented, could reduce production costs from £241 per MWh—achieved in the first Hydrogen Allocation Round in 2023—to less than £100 per MWh.
The trade associations emphasize that affordable green hydrogen will be crucial for decarbonizing industries like steel, chemicals, and shipping, and for providing long-duration storage for surplus electricity. As the UK aims to scale up hydrogen production, the report asserts that reducing production costs is key to making the fuel more accessible and enabling its widespread deployment.
The price of electricity used in the electrolysis process is currently responsible for approximately 70% of the final cost of green hydrogen, making it a primary focus for cost reduction. The report offers eleven recommendations to help lower these costs, including calls for government reform of the hydrogen production business model (HPBM) to secure investment. Other measures include incentivizing electrolysis when electricity is cheapest and allowing hydrogen producers to co-locate projects with renewable energy generators that already have planning consent.
Additionally, the report advocates for an ambitious hydrogen transmission network, with pipelines linking Scotland to England and Wales, and suggests reducing the charges for developers accessing the electricity grid.
Clare Jackson, Chief Executive of Hydrogen UK, stated: “This report, a combined effort from the trade associations, marks pivotal steps towards achieving our national goals in energy security and clean energy transition by making hydrogen an economically viable option.
Dan McGrail, Chief Executive of RenewableUK, added: “Green hydrogen generated from renewables will play an important role in helping the Government to achieve its clean power mission. Enacting the key measures set out in this report will enable the UK's nascent green hydrogen industry to build on its global lead in this technology, driving down costs significantly in the long term.
